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Barriers to Trade

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Institution Barriers to trade are government-induced restrictions on trade. There are several different types of trade barrier. They include tariffs and non-tariff barriers. A tariff is the amount of import duty charged on a particular type of goods. Non-tariff trade barriers are measures intended to favor local industry (Maskus, 2001). They can include trade regulations, labeling rules, and unfair government subsidies The World Trade Organization (WTO) deals with the global rules of trade amongst nations and its main purpose is ensuring that trade flows as smoothly, predictably and freely as possible.
A major rule of the multilateral trade system states that reductions in trade barriers are applied, on a most-favored-nation basis, to all World Trade Organization members (Hoekman, 2009). This means that no WTO member is discriminated against by a fellow member's trade regime. Regional trade agreements (RTAs) are however an exception to this rule. Under RTAs reductions in trade barriers apply only to the parties to the agreement. There are two major types of regional trade agreements under the World Trade Organization; customs unions and free trade areas. Some countries may decide to sign interim agreements operating during a transition period, ultimately leading to the creation of a customs union or a free-trade area. Regional trade agreements must be consistent with the World Trade Organization rules that govern such agreements, which require that parties to a regional trade agreement must establish free trade on almost all trade happening within the regional area, and the parties can never raise their tariffs or other barriers against countries outside the agreement.

The creation of the World Trade Organization ma a significant step towards a more integrated and thus more dynamic international trading system. The WTO

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